Illinois House bill would stop local governments from pushing out Airbnb

New Illinois House bill would prevent local governments from banning Airbnb and other vacation rental services.

Airbnb’s growth has created push-back from hotels in the form of new taxes and stringent regulations by local communities, but a new Illinois House bill would halt bans and overregulation of vacation rental services.

Vacation rental services provide valuable and affordable lodging alternatives for visitors, and income streams for residents. Studies suggest the growth in vacation rentals benefits both property owners and the broader economy.

The services, also known as home sharing, have come under fire across the nation. New York City bans vacation rental of full units for fewer than 30 days.

Closer to home, Illinois municipalities have used many ways to regulate or tax these services. Chicago, Naperville and most other municipalities choose to extend their hotel-motel use taxes to vacation rental platforms. Chicago also imposes an additional, significant tax of over 23 percent on vacation rentals atop Chicago’s already-high 17.4 percent hotel accommodations tax.

In 2016, Chicago passed an ordinance that tightened regulations on vacation rentals. The ordinance required hosts to obtain a license before operating in the city and report user data to the city twice a month. Rollout of the registration was riddled with errors and delays, only adding to the burden.

Also, the ordinance allowed city officials to search a host’s private residence “at any time and in any manner” without warrant or probable cause. Following concerns over the constitutionality of that provision, raised by the Liberty Justice Center and Goldwater Institute in Mendez v. City of Chicago, the city amended the ordinance. The Liberty Justice Center is the litigation partner of the Illinois Policy Institute.

Chicago’s stringent regulations in August 2018 led it to reject 2,400 Airbnb hosts and order them to remove their listings from the platform. In 2017, Chicago Ald. Marty Quinn, 13th Ward, attempted to squeeze out new Airbnb units in select precincts surrounding Midway Airport.

In many cases, taxes and restrictions on vacation rentals come at the request of hotel operators and industry lobbyists to protect those businesses from competition. For example, in the Bloomington-Normal area, hotel operators lobbied local governments to tax and regulate Airbnb. Ray Ceresa, president of the Bloomington-Normal Hotel and Lodging Association, told WGLT-FM’s “Sound Ideas” that Airbnb listings were “taking away” business from his industry. Likewise, the Illinois Hotel and Lodging Association also joined in on calls for stricter local regulations.

HB 2919 allows municipalities to tax and regulate vacation rentals, as long as regulations do not become burdensome restrictions and do not discriminate against the services.

Lawmakers in Springfield should act to pass this measure to protect property rights and stop local governments from overregulating. Meanwhile, local governments should reject calls for greater burdens on consumer-friendly vacation rental websites.